Amid the urging of Parliament, which wants to consolidate Australia’s retirement consortiums for the sake of simplicity, two of the top-performing superannuation funds are merging.
The decision by the A$16 billion ($11.3 billion) Equip and the A$9.7 ($6.8 billion) Catholic Super will see the new super as a A$25.7 billion organization housing more than 150,000 members. Both funds consistently rank in the top 10 of Australia’s superannuation plans.
Equip, which splits its investments into six portfolios (growth plus, growth, balanced growth, MySuper, balanced, and conservative) has returned an aggregate 7%, 9%, 7.7%, and 8.8% over the one-, three-, five, and 10-year period as of March 31. Catholic Super divides its investments across two portfolios (super and pension). Its super has returned 2.65%, 5.30%, 7%, and 15% over the same periods while the pension portion has returned 3%, 5.9%, 7.8%, and 9.4%.
The two funds will stick to their previous governance structure where one-third of the combined board will be independent. The other two-thirds will consist of members and employers.
The nation is in the midst of a consolidation for the superannuation industry, which caters to the pension plans of an entire sector. Parliament recently decided supers should combine their resources to improve overall performance while simplifying the configuration of the 198-fund industry as there is an abundance of supers involved in the same industries that underperform. While this push is geared toward funds that have showed lackluster performances, Equip and Catholic Super want to cut costs and provide the best of both worlds for their members.
“This joint venture would contain costs and improve efficiency, bringing real benefits to members,” said Andrew Fairley, Equip’s chair. “This structure will drive stronger performance through efficiencies and scale of investments.”
The move is the second merger for Equip in less than a year. In July, the then-A$8.5 billion superfund absorbed the A$5.7 billion Rio Tinto Staff Superannuation Fund, projected to save more than $12 million in fees.
Equip and Catholic Super are the third big Australian superfund merger within three months, following State Super and VicSuper Pty in April, and Sunsuper and AustSafe in March.
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Tags: Australia, CatholicSuper, Equip, Pension, Superannuation